Kickstarting the Savannah
Kenya’ much-vaunted ‘Silicon Savannah’ tech platform is struggling to make a go of it as start-ups fail to make an impact. The country is home to leading mobile payments service M-Pesa, which racked up revenues of $300 million last year, and the Kenyan government has promised to provide plenty of back up to the tech sector, but there’s a serious shortage of success stories to bolster innovation confidence.
There are even reports that finance is likely to head to Lagos rather than hang around in Nairobi. One of Nigeria’s biggest pluses - aside from its highly entrepreneurial culture –is that it has a population four times the size of Kenya’s, giving companies a healthy home market to target.
Part of Kenya’s problem could well be down to entrepreneurs failing to tackle local problems. While investors in Silicon Valley seem to have endless cash to pour into sharing economy disruptive companies – which often offer nothing more than aggregator services – that kind of luxury ‘innovation’ won’t wash in much of Africa where the problems which need solving revolve around water, healthcare, education and transport. M-Pesa succeeded because it offered a utilitarian service in markets underserved by financial institutions.
It also appears that African investors don’t need to chance it so readily. “Tech is very risky and there are so many other low lying fruit for investment, why take the risk with tech?" Dorothy Gordon director general of the Kofi Annan Centre of Technology excellence in Accra, tells Reuters.
There’s a lack of support too. A recent GSMA survey found that tech-focused business angels and angel networks are only just emerging in the region. “Even though mentorship opportunities were available through networks, accelerators, and peer groups, these avenues were not sufficient to overcome gaps in practical business and management knowledge,” the association says.
Unsurprisingly, the GSMA believes mobile can be a major catalyst, though there are issues there too. Kenyan mobile operators “have indicated they would like to create value through sharing access to services or through combining operator resources with those from entrepreneurs, customers, and others in the ecosystem,” the association reports. “However, business processes to handle creative activity with start-ups are not well-established at present. While mobile operators have been experimenting with different approaches to engage startups, an overarching strategy at the operating country or group level is lacking for most.”